SET Announcements

total area of more than 3,000 rai in Amphoe Wang Chan, Rayong Province. PIC is a company in the group of shareholders of Rayong Real Estate. Rayong Real Estate intended to engage the Joint Venture to carry out construction of its whole project. In the initial period pending the commencement of the project, Rayong Real Estate requested to borrow funds from the Joint Venture for use as advance payment for its project commencement as it was awaiting a financial institution's consideration and approval of a credit facility for such purpose. In respect of such borrowing from the Joint Venture, Rayong Real Estate registered the mortgage of certain plots of land and construction thereon as security for the Company. In December 2003, the Joint Venture proposed this matter to its board of directors for consideration. The Joint Venture's board of directors approved such transactions by using its working capital. In this regard, the Joint Venture anticipated benefits to be received by the Joint Venture in the future from the construction works in regard to the development of such premium grade real estate and construction of golf course, including resort and golf club, so that the Joint Venture would have opportunity for future engagements. In addition, the plots of land and construction thereon with the values of approximately Baht 1,036 Million and Baht 361 Million, respectively, as appraised by the independent appraiser as at December 2002, were provided to the Company for use as security for issuance of a bank guarantee in the amount of Baht 500 Million and the Company's borrowing from the bank in the amount of Baht 650 Million, and the Borrowers also guaranteed the Company's borrowing from the bank. These loans have specific repayment schedule and are subject to interest at the rate higher than the Joint Venture's cost based on the comparison with the cost of the Joint Venture in case of borrowing from financial institutions. However, even though such transactions were within the scope of power of the Joint Venture, the Joint Venture proposed this matter to the Company's Executive Board Meeting No. 13/2003 held on December 1, 2003 for acknowledgement. 2.3 Details of the long-term loan agreements, security and debt serviceability of the respective Borrowers, indicating: 2.3.1 Details of the long-term agreements, interest rate and repayment schedule. 2.3.2 Valuation of the security by the independent appraiser and details of the security, i.e., name of the independent appraiser, appraisal method and appraised value, the date on which the Borrowers acquire the security, current situation of holding the security in case the Borrowers hold no possession of the said security, please specify the procedures for providing additional security to ensure compliance with the conditions of the loans. As at December 2002, the appraised values of the security under the loan agreements amounted to approximately Baht 1,036 Million and Baht 361 Million, while, according to the audited financial statements for the year 2005 from the Ministry of Commerce, the book value of the Borrowers' property, plant and equipment amounted to Baht 319.2 Million. 2.3.3 Whether the Company has arranged for registration of pledge or mortgage of the said security for the Company to legally hold ownership of such property. 2.3.4 Movements of the loans, receipt of loan repayment and interest. 2.3.5 Reasons and necessity for the Joint Venture and the Borrowers to extend the repayment schedule on each occasion. 2.3.6 The Borrowers' ability to pay the principals and interest, and should there be any outstanding payment, please specify the Company's action in demanding for repayment. The Company hereby clarifies that Rayong Real Estate and PIC entered into the loan agreements with the Joint Venture, with interest at the rate of MLR+0.25 percent per annum with an additional margin of 0.25 percent per annum, whereby the Borrowers agreed to be additionally charged at the rate of 0.25 percent from the borrowing date until the date on which the repayment is made in full, together with additional interest rate of one percent per annum from the borrowing date until the date on which the repayment is made in full to the Joint Venture. The two companies registered mortgage of land as security against debts for the Company. As at December 2002, the appraised values of the security under the loan agreements were approximately Baht 1,036 Million and Baht 361 Million, while, according to the audited financial statements for the year 2005 of Rayong Real Estate from the Ministry of Commerce, the book value of the Borrowers' property, plant and equipment amounted to a total of Baht 319.2 Million which was recorded pursuant to the accounting principles, namely, at cost less accumulated depreciation. Most of such land was acquired during the years 1994 to 1995 at relatively low prices while the current market prices of such land are considerably higher than those in the years 1994 to 1995. In addition, in the year 2007, the Company received a property appraisal report by Thai Surveyor & Advisory Co., Ltd., dated June 28, 2006, in which the market approach was applied in the valuation of the security under the loan agreements, i.e., certain plots of land and construction thereon in the amount of approximately Baht 1,143 Million, and the mortgage of land title deeds based on the existing appraised value of approximately Baht 361 Million. Having considered the values of the security against the said loans, the said values are more than the debts owed by Rayong Real Estate and PIC to the Joint Venture. In the year 2004, Rayong Real Estate and PIC partially repaid the loans in the amount of Baht 140 Million with the total interest of Baht 37.95 Million to the Joint Venture (in proportion to the shareholding in the Joint Venture). The reason why the Joint Venture extended the time for loan repayment for Rayong Real Estate and PIC during the year 2005 to June 2007 is because Rayong Real Estate is awaiting the approval of credit facility from financial institutions for the project of land development, investment in construction of golf course, resort and golf club, and development of premium grade real estate for sale with buildings, in the total area of more than 3,000 rai. Such request for credit facility is for a large-scale project. Due to an uncertainty of the economic situation, the financial institutions thus delay the consideration of the credit facility. In this respect, Rayong Real Estate has assured the Joint Venture that it would allow the company group of the Joint Venture to carry out the construction of its entire project. Joint Venture has been issuing notices demanding Rayong Real Estate and PIC to accelerate the repayment since the year 2005 and entered into negotiations with the management of Rayong Real Estate and PIC to accelerate such debt repayment. Furthermore, the reason why the Joint Venture extended the time for loan repayment for another one year, from June 2007 to June 2008 is because in March 2007, Rayong Real Estate and PIC sent letters confirming to repay the loans and agree to pay additional interest at the rate of one percent per annum from the borrowing date until the date on which the repayment is made in full, whereby such repayment to the Joint Venture shall be made at least once a year by no later than December 31, 2007, while the remaining debts shall be repaid in full by June 31, 2008. Should there be any default on repayment, the ownership of all of the said land shall be promptly transferred for repayment to the Joint Venture. Should the values of the security be higher than the outstanding debts owed by Rayong Real Estate and PIC, the Joint Venture shall return the excess to Rayong Real Estate and PIC. Should the values of the security be less than the outstanding debts owed by Rayong Real Estate and PIC, the mortgaged land shall be redeemed for transfer to the Joint Venture or for sale with the proceeds thereof shall be used to repay the debts owed to the Joint Venture until the repayment is made in full. Furthermore, Mrs. Piyaphon Setha-olan also entered into the personal guarantee agreement for the full repayment of the outstanding debts to the Joint Venture. 2.4 Policy of the Company and the Joint Venture on provision of loans to other companies in the future and their policy on business operation. The Company hereby clarifies that the Company has set out a policy for the Joint Venture on provision of loans to other companies in the future by prohibiting Joint Venture CKAE from providing loans to any other legal entities in the future. The Company will keep you informed of the progress of receipt of the loan repayment and interest payment, and will submit the Financial Statements through the electronic media of the Stock Exchange of Thailand, starting from the submission of the Financial Statements for the first quarter ended March 31, 2007 onwards until the loan repayment, together with interest, is made in full. Please be informed accordingly. Very truly yours, - Signature - (Mr. Plew Trivisvavet) Chief Executive Officer